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In all fields of industry economics plays an important role. In power plant engineering
economics of power system use certain well established techniques for choosing the
most suitable system. The power plant design must be made on the basis of most
economical condition and not on the most efficient condition as the profit is the main
basis in the design of the plant and its effectiveness is measured financially. The main
purpose of design and operation of the plant is to bring the cost of energy produced to
minimum. Among many factors, the efficiency of the plant is one of the factors that
determines the energy cost. In majority of cases, unfortunately, the most thermally
efficient plant is not economic one.
After the studying of this unit, you should be able to
know the costs associated with power generation,
describe the fixed and operational costs,
explain the economics of plant selection, and
explain the economics of plant operation.
Power Plant Engineering 7.2 TERMS AND DEFINITIONS
The connected load on any system, or part of a system, is the combined continuous
rating of all the receiving apparatus on consumers’ premises, which is connected
to the system, or part of the system, under consideration.
The demand of an installation or system is the load that is drawn from the source
of supply at the receiving terminals averaged over a suitable and specified
interval of time. Demand is expressed in kilowatts (kW), kilovolt-amperes (kVA),
amperes (A), or other suitable units.
Maximum Demand or Peak Load
The maximum demand of an installation or system is the greatest of all the
demands that have occurred during a given period. It is determined by
measurement, according to specifications, over a prescribed interval of time.
The demand factor of any system, or part of a system, is the ratio of maximum
demand of the system, a part of the system, to the total connected load of the
system, or of the part of the system, under consideration. Expressing the definition
Maximum demand Demand factor =
. . . (7.1)
The load factor is the ratio of the average power to the maximum demand. In each
case, the interval of maximum load and the period over which the average is taken
should be definitely specified, such as a “half-hour monthly” load factor. The
proper interval and period are usually dependent upon local conditions and upon
the purpose for which the load factor is to be used. Expressing the definition
Average load Load factor =
. . . (7.2)
The diversity factor of any system, or part of a system, is the ratio of the maximum
power demands of the subdivisions of the system, or part of a system, to the
maximum demand of the whole system, or part of the system, under consideration,
measured at the point of supply. Expressing the definition mathematically,
Sum of individual maximum demands Diversity factor =
Maximum demand of entire group
. . . (7.3)
The utilisation factor is defined as the ratio of the maximum generator demand to
the generator capacity.
Plant Capacity Factor
It is defined as the ratio of actual energy produced in kilowatt hours (kWh) to the
maximum possible energy that could have been produced during the same period.
Expressing the definition mathematically,
Plant capacity factor = E
. . . (7.4)
where, E = Energy produced (kWh Plant Economy ) in a given period,
C = Capacity of the plant in kW, and
t = Total number of hours in the given period.
Plant Use Factor
It is defined as the ratio of energy produced in a given time to the maximum
possible energy that could have been produced during the actual number of hours
the plant was in operation. Expressing the definition mathematically,
Plant use factor = E
. . . (7.5)
where, t = Actual number of hours the plant has been in operation.
Types of Loads
This type of load includes domestic lights, power needed for domestic
appliances such as radios, television, water heaters, refrigerators, electric
cookers and small motors for pumping water.
It includes lighting for shops, advertisements and electrical appliances used
in shops and restaurants, etc.
It consists of load demand of various industries.
It consists of street lighting, power required for water supply and drainage
This type of load includes electrical power needed for pumps driven by
electric motors to supply water to fields.
It includes terms, cars, trolley, buses and railways.
A load curve (or load graph) is a graphic record showing the power demands for
every instant during a certain time interval. Such a record may cover 1 hour, in
which case it would be an hourly load graph; 24 hours, in which case it would be
a daily load graph; a month in which case it would be a monthly load graph; or a
year (7860 hours), in which case it would be a yearly load graph. The following
points are worth noting :
(i) The area under the load curve represents the energy generated in the
(ii) The area under the curve divided by the total number of hours gives
the average load on the power station.
(iii) The peak load indicated by the load curve/graph represents the
maximum demand of the power station.
Significance of Load Curves
Load curves give full information about the incoming and help to
decide the installed capacity of the power station and to decide the
economical sizes of various generating units.
ECONOMICS IN PLANT SELECTION
After selection of type of drive (such as steam, gas diesel or water power) which depends
on availability of cheap fuels or water resources, further selection of the design and size
of the equipment is primarily based upon economic consideration and a plant that gives
the lowest unit cost of production is usually chosen. In case of all types of equipment the
working efficiency is generally higher with larger sizes of plants and with high load
factor operation. Also, the capital cost per unit installation reduces as the plant is
increased in size. However, a bigger size of plant would require greater investment and
possibilities of lower than optimum, load factor usually increase with larger size of the
Steam Power Plants
In case of steam power plants the choice of steam conditions such as throttle
pressure and temperature, is an important factor affecting operating costs and is,
therefore, very carefully made. As throttle pressure and temperature are raised
the capital cost increases but the cycle efficiency is increased. The advantages of
higher pressures and temperatures is generally not apparent below capacity of
10,000 kW unless fuel cost is very high.
Heat rates may be improved further through reheating and regeneration, but again
the capital cost of additional equipment has to be balanced against gain in
The use of heat reclaiming devices, such as air pre-heaters and economisers, has to
be considered from the point of economy in the consumption of fuel.
Internal Combustion Engine Plants
In this case also the selection of I.C. engines also depends on thermodynamic
considerations. The efficiency of the engine improves with compression ratio but
high pressures necessitate heavier construction of equipment which increases
The choice may also have to be made between four-stroke and two-stroke engines,
the former having higher thermal efficiency and the latter lower weight and cost.
The cost of the supercharger may be justified if there is a substantial gain in
engine power which may balance the additional supercharger cost.
Gas Turbine Power Plant
The cost of the gas turbine power plant increases as the simple plant is modified
by inclusion of other equipment such as intercooler, regenerator, re-heater, etc.
but the gain in thermal efficiency and thereby a reduction in operating cost may
justify this additional expense in first cost.
Hydro-electric Power Plant
As compared with thermal stations an hydro-electric power plant has little
operating cost and if sufficient water is available to cater to peak loads and special
conditions for application of these plants justify, power can be produced at a
The capital cost per unit installed is higher if the quantity of water is small Plant Economy . Also,
the unit cost of conveying water to the power house is greater if the quantity of
water is small. The cost of storage per unit is also lower if the quantity of water
stored is large.
An existing plant capacity may be increased by storing additional water through
increasing the height of dam or by diverting water from other streams into the
head reservoir. However, again it would be an economic study whether this
additional cost of civil works would guarantee sufficient returns.
Some hydro-power plants may be made automatic or remote controlled to reduce
the operating cost further, but the cost of automation has to be balanced against
the saving effected in the unit cost of generation.
Interconnected Hydro-steam System
In such a system where peak loads are taken up by steam units, the capacity of
water turbine may be kept somewhat higher than the water flow capacity at peak
loads, and lesser than or equal to maximum flow of river. This would make it
possible for the water turbine to generate adequate energy at low cost during
sufficient water flow.
In a hydro-electric power station with water available and a fixed staff for
maximum output, the cost per unit generated at 100% load factor would be half
the cost per unit at 50% load factor. In a steam power station the difference would
not be so pronounced since fuel cost constitutes the major item in operating costs
and does not vary in the same proportion as load factor. The cost at 100% load
factor in case of this station may, therefore, be about 2/3rd of the cost 50% load
factor. For a diesel station the cost per unit generated at 100% load factor may be
about 3/4th of the same cost at 50% load factor. From the above discussion it
follows that :
(a) Hydro-electric power station should be run at its maximum load
continuously on all units.
(b) Steam power station should be run in such a way that all its running
units are economically loaded.
© Diesel power station should be worked for fluctuating loads or as a
Demand Factor and Utilisation Factor
A higher efficient station, if worked at low utilisation factor, may produce power
at high unit cost.
The time of maximum demand occurring in a system is also important. In an
interconnected system, a study of the curves of all stations is necessary to plan
most economical operations.
The endeavour should be to load the most efficient and cheapest power producing
stations to the greatest extent possible. Such stations, called “base load stations”
carry full load over 24 hours, i.e. for three shifts of 8 hours.
The stations in the medium range of efficiency are operated only
during the two shifts of 8 hours during 16 hours of average load.
The older or less efficient stations are used as peak or standby
stations only, and are operated rarely or for short periods of time.
Presently there is a tendency to use units of large capacities to reduce space costs
and to handle larger loads. However, the maximum economical benefit of large
sets occurs only when these are run continuously at near full load. Running of
large sets for long periods at lower than maximum continuous rating increase cost
of unit generated.